BOARD00880

• Board Meeting Date: 5/19/2003
• Description: CF Section - Policy Review Policy #7 - Annual Construction Fund and Severance Tax Trust Fund Perpetual Base Account Loan Lending Rate Determination
• Board Meetings - Doc Type: Memo

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PURPOSE:

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4. Colorado's farms IIl1d ranches are irreplaceable resources providing food.
fiber, open space, wildlife habitat, stable economies in rural areas and
mlll1Y other benefits. To help sustain the vitality of these economies, the
Al!ricuItural Rates will be based on the project sponsor's
organizational structure and the number of water users benefiting
from the proposed project, and will be structured as follows:
a. The Al!ricultural Non-Profit Rate will be calculated as 50
percent of the Baseline Rate rounded to the nearest one-
qnarter of one percent. The Non-Profit Rate will apply where
the project sponsor's organizational structure is, for example,
a corporation, district, or association, and the project benefits
many water user members.
b. The Al!ricultural For-Profit Rate will be calculated as the
target growth rate of the Construction Fund established
through fmancial policy #13 rounded to the nearest one-
quarter of one percent. The For-Profit Rate will apply where
the project sponsor's organizational structure is, for example,
a solely owned corporation, a partnership, or an individual,
and the project benefits few water users.
5. The 3D-year lending rate may be reduced for each lending category by
one-quarter of one percent for all loans with maturities of 20 years or less
but more than 10 years and by one-half of one percent for all loans with
maturities of 10 years or less.
6, For specific projects that involve matters of statewide concern, such as
interstate compacts, the Board may establish a lending rate somewhat
lower than the adopted rate for the particular class of borrower.
7. For project borrowers that fall into more than one lending category, i.e. an
agricultural irrigation company with municipal shareholders, a weighted
average lending rate will be established based on the percent ownership of
each lending category within the borrower's organization. The lending
rate will be revised at any time during the life of the loan when an
ownership change would increase or decrease the weighted average by
more than 0.5%

To establish an annual lending rate structure for Construction Fund and
Severance Tax Trust Fund Perpetual Base Account loans.

APPLICABILITY:

This policy and procedure apply to all applications for loans from the CWCB
Construction Fund and Severance Tax Trust Fund Perpetual Base Account.

PROCEDURE: The CWCB staff will compile the closing weekly yields for the 3D-year "A"
rated municipal bond for the six months preceding the May Board meeting of
each year and estimate the bond's average annual yield. A lending rate
structure will then be developed as outlined above IIl1d will be presented to the
CWCB at the May Board meeting of each year, The interest rates calculated
based on this procedure will be effective for Construction Fund and Severlll1ce
Tax Trust Fund Perpetual Base Account loan applications for the upcoming
Fiscal Year and will be effective July 1 through the following June 30.
Flood Protection. Water Project Planning and Financing. Stream and Lake Protection
Water Supply Protection. Conservation Planning.